Former Fed President Kocherlakota Slams The Latest ‘Labor Shortage’ Claims

Narayana Kocherlakota, the former President of the Federal Reserve Bank of Minnesota, slammed claims of that a labor shortage is holding back homebuilders.

https://twitter.com/kocherlakota009/status/880858521893576704

Breitbart News noted last week that claims of a labor shortage in North Texas were implausible in light of government data that revealed that construction wages in the region were significantly lower than national averages. If labor were truly scarce, wages would be rising to meet the demand of builders and homebuyers.

An article in the Wall Street Journal highlighted a survey of real estate developers making similar claims about a labor shortage–this time on a nationwide scale.

About two-thirds of the contractors who are struggling with the labor shortages gripping the construction industry say it has become a challenge to finish jobs on time, according to a new survey.

More than one-third of contractors said they are being forced to turn work down and 58% said they are putting in higher bids, said the survey sponsored by USG Corp. and the U.S. Chamber of Commerce. Three-quarters of those who said they are having difficulty finding skilled labor said they are simply asking their employees to work harder.

“Basically they’re just making people work harder as a way to cope,” said Steve Jones, senior director of Dodge Data & Analytics, which was the research partner of USG and the Chamber on the project.

Kocherlakota pointed out that in a competitive market, employers raise wages when they need to attract more workers to meet rising demand. Alternatively, they raise the price of the goods produced. If employers are not raising wages or prices, but instead holding back production, it implies that there are anti-competitive barriers permitting this kind of oligopolistic behavior.

Tom Ciccotta is a libertarian who writes about economics and higher education for Breitbart News. You can follow him on Twitter @tciccotta or email him at tciccotta@breitbart.com